tv Bloomberg Business Week Bloomberg September 9, 2017 3:00pm-4:00pm EDT
oliver: we are with megan murphy to talk about the special theme this week, which is "sooner than you think." in terms of things you may not be thinking of now, but are than you more quickly might think. we talk about ai, we talk about tech, that would want to talk about lesser-known trends in other parts of the world. we talk about china, and the .esearch of live streaming we talk about some of the challenges facing our urban centers. how you go about mapping, different places where tech is excelling and you are not hearing much about it. so, taking those trends that are known about, and taking them to the next level. reading through the content this week, i was constantly going back and forth between, this is exciting and great, and this is terrifying.
megan: i have a two and a half year old, so think of it as a baby being developed, younger than that. an artificial baby, we should say. grafting, motion, learned response, and how quickly that develop -- that is developing is frightening. but we have to look at the profound social, economic, political destruction around the world. it really is a story of hope and optimism and truth that communities around the world are galvanizing with the tech community, with other sectors of the economy, to push innovative solutions. oliver: let's talk about one of the more positive thematic ones, a combination between technology and society, and that is what is happening in china as people streaming -- people are streaming more. megan: in china this takes on a special dimension because the
government their controls the internet. and what has really sprouted up live streaming people who bring people into their bedrooms, bring people into their dorms, bring people into their lies and fulfill every day interactions. you have gay men, gay women, showing people what it is like to live that lifestyle. it is not something you read or see much in china. and on the other hand, you have brands using this phenomenon, to give people a more authentic experience by focusing on a group of live streaming's and seeing, can we gain share in china that way? its a fascinating experience that we are seeing play out. but it is a big business. credit suisse estimate is going to be worth $5 billion, in terms of the economy. it is a pretty big chunk of what is happening in china, in the tech center. oliver: i thought it was fascinating because there
is a push toward streaming, and i find myself being cynical about it, how many makeup tutorials can you do. at what i think you guys do great job of detailing is, a lot of times these live streams are offering escapes, because there are so many communities that are marginalized in china, but the are not here. megan: exactly, and to think that is something people haven't figured out. i think as people monetize this, they are going to figure it out. but it is this experience of community that you can't get anywhere else, and it hinges on authenticity. and we will see, will the government tried to track down on this further? because it is introducing marginalized groups to a wider audience. or will it be, as this community gets more wide and diverse and more saturated, that some of the authenticity gets stripped away? decades,over time, or
will we understand the profound change that this phenomenon has introduced in society, where you an feel just as connected to person in a dorm room, as a person sitting across from you at the table. machine,lso, the soul i have trouble saying it, but it is a cool look at a very interesting technology. megan: just, how fast ai is developing, mapping human emotion and human development. it is not just about getting someone to do the right thing or the wrong thing, as you map it. and humanistic responses, and ai that is what is going to be transformative for us. it is an incredible story. and we have details now on the technology. our reporter went to new zealand to check out the lab of soul machines, which is the
brainchild of a university of auckland researcher, and for a time, sort of a star in hollywood, who was the head of cgi development for characters kong."?ar" and "king it has been decades and we are trying to make virtual faces look as human as we can't. and he is gotten a few degrees closer with soul machines. he has also pushed into artificial intelligence proper, to make the creatures behind the spaces think as humanly as possible. oliver: soul machines is kind of a scary title. machines,nk of soul it is his way of communicating, very much so, that you can re-create the human experience and human emotion through systems of algorithms and, basically, inputs, that can
affect how we react to things. how is he doing this? is the most intuitive way to humanize ai. he has constructed a virtual chatbots that looks more human than most. and the long-term plan of the company is to sell them, they have a contract with about 10 companies, including airlines, to put these virtual chatbots on company websites to make their theractions with people in customer service world feel a little bit better than just straight text. we think about how artificial intelligence has overlaid onto big data, or artificial intelligence in terms of robots. it seems like we have expanded the reference point for artificial intelligence, what it actually refers to? him, it seems like he is
concentrating on the human face and how important that is in making artificial intelligence seem real. >> absolutely. they focused energy on micro the kind of thing that conventional avatars don't seem to nail. iey have shot their way out, don't know if you have seen any of the videos attached to the story, but the ai baby that he is trying to teach him to think looks as much like a human as possible. as real as you or i do. oliver: the photos from the story, we are looking at a baby's face that looks so real, it looks like it could be anyone's kids. the eyes are very real. it has blushed cheeks. where is he sourcing the data from? tell us about his first project the, because it seems like interactive baby is the brainchild, right now. >> absolutely. x is the principal ai
creation he has been working to refine the last couple of years. it is based on photos from 18 months, of his own daughter. and he has managed to get to the point, or advanced to get to the point where i got a look at his lab, when the baby was still a disembodied head. but it was already amazingly lifelike, and it could follow your eye line and learn to recognize words and shapes and objects, based on you holding a book up to the computer screen. and it was already astonishingly, emotionally reactive in terms of responding to you saying, good job, you got the word apple right, or, no, you didn't get this one. what we have done with a
past few special issues, we ran with this. oliver: this is a randomized thing. if you pick up "bloomberg businessweek" up the shelves, you are going to get one of three covers. >> the first one is about artificial intelligence. this guy has a very creepy, in my view, realistic looking virtual baby. and its a picture of him with the baby, on screen. and that we have this guy who wanted to be a pioneer of deep-sea tourism. he is popping his head out of this submarine. oliver: kind of like a buzz lightyear vibe going. >> so, we like that. and this other one, vertical farms. it is this woman in a vertical farm facility, picking vegetables. oliver: it has kind of a "soil
green" feel as well. this, from a at photography perspective, it is hard to tell that is not even real. >> its true. we even have close-ups of the baby emoting. and you have to do a double take to realize it is just a computer. oliver: up next, booking your trip aboard the titanic. yes, that titanic. this is "bloomberg businessweek." ♪
of the ocean. about the world's most advanced, private minisub. >> this is a seattle area bon up obsessedgrew with space, always wanted to be an astronaut. and that he realized his ambition was to find new worlds and see crazy life forms. but that is not reality. that is not what astronauts are doing. at the same time, he started looking at the oceans and realized that, there is this vast unexplored universe on our planet. we know very little about the deep ocean. oliver:+++
that can provide us with a wealth of knowledge. >> literally, for some reason i can go the depth of the ocean. military submarines are not deep-sea exploration vehicles. and there is not a lot of funding for it. i think space seems more compelling to people. hollywood has always portrayed space as this romantic thing, and the ocean as this scary thing. i do think it is a dangerous, formidable place. the crushing pressures, the claustrophobia, people just don't feel comfortable getting inside a tube and going underwater. roche, why ison he the one to leave the exploration into the deep. why do we trust this guy? >> he was like, i want to find somebody going out and exploring the ocean, and no one is doing it. each of those four submarines is owned by government, used for national purposes. so, there are a few sobs out there, one off built by engineers. there is very little r&d going into this.
going tos like, i'm have to build my own, because there is certainly a need for research, oil platform repair, he has a whole list of things he will able to do once he builds this sub. but tourism is sort of his gateway drug. looking at the business aspect of this, this is the guy who came into some money, he was also driven by this and refurbished some old subs, but the bottom line is he has some money to spend. it seems like largely, he is and he is himself saying, i am willing to do this because i see a market there that is not being serviced. why does he feel like there is such a demand for people to go deep underwater, and paid to do it? >> he originally thought oil
companies would be dying for a submarine that could help them repair platforms, like deepwater horizon. but it turns out they were something like, who are you and why should i give you money to build it? build itd i'm going to anyway, and then he realized there was a company that leased to russian subs that were no longer used, and took people to titanic. and he thought, that has artie been done, nobody wants to go to titanic. but it turns out, a lot of people want to go to titanic. so he put out the word softly, but if i go to titanic, and he sold out before it was even announced. and he told me, the problem was never demand, it was supply. but the russians had these two sobs they leased out, and then they to them away. so there was no way to get there. they think they can sell thousands of seats to the titanic.
the biggest ad buy in history. indoor is a massive farm, and it does vertical farming. but the difference between istical farming and this, that the plant actually grow on vertical poles that are stacked next to each other. i visited this farm, and it looks like these are 20 foot walls of plants, stretching as far as the eyes can see. the plan is to build these gigantic indoor farms outside every major metropolitan city around the world. the ceo and his chief science officer, the way they designed the system, it can grow up to 350 times more yields than a traditional outdoor field, and it use 1% of the water. we have these giant indoor farms, not to be called wherebut let's talk about
this is now. where did you go to visit the farming unit, if you will, and what did you see? selina: their first farming site is in san francisco, and it was quite a process to get into the unit. i had to go into a cleaning roo white onesie, put my feet in sterile water, put gloves on, and the reason you have to take such precaution before going into these farms is that, each of the gigantic rooms is a perfectly controlled environment. everything in there is made so utmost, plant is at the peak conditions. the temperature, the oxygen level, the type of light being fed to the plant, everything is timed perfectly. but the plan is to take each of these growing rooms and to build them in less than 30 days around
the world. they are targeting every city with more than 100 people. there are about 500 cities of that size around the world. oliver: big aspirations here. let's talk about who is in charge. as i was trying to describe where you went, i was vacillating between a farm in a lab. it is hard to wrap your head around it, if you haven't seen it. the chief executive officer of the company wants you to call it something specific. tell us why. : the ceo and the science officer both have a history rooted in traditional farming. and this is really about completely, radically changing the way we eat our food, where it is grown, and how we consume it. and he wants this to be as normal as a public utility, the idea that food is grown indoors. itis best as i free, environmentally friendly, and he
wants to ask her consumers see this as something normal, and that governments are supportive of this new way of farming. and by calling a lab or a warehouse, he worries that consumers are going to be turned off by the idea of eating food comes from an indoor room where there is no so oil or sunlight. that is his main concern. next, colombians yank out the welcome mat, at least for some oil producers. this is "bloomberg businessweek." ♪
town's in colombia are exercising constitutional rights to block oil and mining projects , endangering the companies of status as a major petroleum exporter. >> in this town, in july, the tomunity held a referendum decide whether a toronto-listed company is going to be allowed to come in and drill exploratory wells in a block they acquired. and they voted massively against the project another company's stock. there is nothing they can do. reporter spent the whole day in town trying to ferret out the no votes, but could not find anyone. into theo, let's dig details here. how is the relationship here between a toronto-based driller a south american, very
different population. how did this relationship come to be? >> this company has all of its assets in latin america. it is listed in toronto. we see a lot of that in the region. ceo is a fluent spanish speaker and has operated in the region for a long time. traditionallyeen very friendly to foreign investors, so that has been a shock. what i'm trying to figure out is the relationship between the locals and the corporation. this is what is at the heart of the story. >> because colombia has a tradition of bringing friendly -- being friendly, nobody thought they had to go into a community and lobby the local people about their projects. the idea was, you bought a parcel, you were allowed to explore on it, and you are just going to carry on. the only exception to that has territories,enous
where the constitution specifies there is a mechanism for local people to reject projects. in colombia, the mining code did not allow for any consultation before. but then, the constitutional court ruled recently that that provision was unconstitutional, that the mining code predicted the constitution. oliver: now this opens the door to this local level. >> that's right. it started with mining projects, and there is a far bigger project, a south african company has poured more than $350 million into a mine they are trying to develop in western colombia. in march, there was a vote in that town and they also nixed the project. oliver: why the pushback from locals? is it because they now have the constitutional authority to do
this, and there is a shift in the actual legality of the scenario? or is it just take him out we don't want this in our backyard, very simple? >> i think there is a bit of nimby, right? but there is something that incentivized people to say no. there is a change in the way royalties are incentivized by projects. they tweet the formula so that lower that local towns are getting less money. the reason is, during the commodity boom there was a lot of money going to local coffers and the government felt it was squandered, it was stolen. so they said, we will spread it more evenly across the country and more will come to the national government and then we will give it back out. but in effect, people say, we are getting less so what is the incentive arrestable yes on these projects. and in a farming community, there was a lot of concern of what was going to happen to the water. to move annext, how
welcome back. still ahead in our sooner than you think section, what to do when your entire town is sinking into an iron ore mine? brain controlled computers, and north korea's dangerous insurance policy against regime change. all that ahead on "bloomberg businessweek." ♪ we're back with editor in chief megan murphy to talk about more must-read stories. let's go with the remarks section and talk about a big issue everybody has been thinking about more than they
want, north korea and the threat the regime poses. megan: we have seen a dramatic escalation of them continuing to do missile tests and also a frustration at the lack of any coordinated foreign policy response, coordinated diplomatic response, and talk of a military response. which is somewhere no one wants to see. this piece is focused on resetting this and making people realized heart of this, at a huge part of what is driving this aggression in terms of military -- increasing their military program and ballistic missiles, is the desire to save the regime which no one expected to still be standing. kim jong-un is strictly depicted as a madman and not knowing what he is doing. what if the reverse is true? the steps he is taking response to acceleration of the country's nuclear program is what he thinks our best to save himself and his regime and the ruling elite in north korea.
we have to remember this is a country devastatingly poor outside the elite. gdp has increased as much as 4% this year, the median income is still below $6,000 per citizen that is facing extreme poverty. there is continued economic sanctions, which is in the primary diplomatic response. they only have so much they can go because so much is already reigned in. they will no longer be able to defend under allies russia and china. this is moving against them. if a look at it through that lens of how protected they are and see this program has potentially the only thing that can really protect them. how much other options or really limited when dealing with that kind of situation.
jonathan: it is an insurance policy. megan: and the only when they have. there is no other military, economic or political response they see them will be as effective to keeping their standing in the world. jonathan: there are certainly going to be wide swaths of people that recoiled at the idea of essentially trusting this survival instinct of somebody who has demonstrated to be very ruthless, someone who is kill people in his own family. how do you think this approach can perhaps assuage some of the concerns or get people to start thinking about this and were constructive way? can you think of kim jong-un has a rational person? megan: is a hugely important point that so much of this discussion, and particularly how the trump administration has thought to characterize him as someone who is not capable of rational behavior and operating as a lone wolf in a region that is very unstable. however, if we tried to imply a method to the madness, perhaps
that will allow us to shift from focusing so much on economic sanctions which are extreme and have been able to clamp down other ambitions, on a military response which is something no one wants to see and talk about what michael discusses, which is acknowledging and accepting them as a nuclear power or an aspiring nuclear power. this summer has been catastrophic in that region. it is something that is the biggest threat if you talk to anyone in washington. when he new thinking on this front. existing thinking is not making progress. this is potentially a way forward if we view the problem in a different way. jonathan: let's go back to the sooner than you think thematic. there is an interesting story in sweden. it's about moving a town. megan: they have the largest deposits of iron ore. it is the world's largest
deposit of an unusual deposit. as a dig deeper and deeper to excavate this, they basically have made huge part of the town unstable. the town -- the mine is the town. they are used to being displaced. what this talks about is how the urban planning, the development that has gone in, to move the town section by section as well as businesses to new places that will still be stable and a part of sweden where the man who has been the biggest protester is a champion dog sledder. it is not a business you would think is a huge market, but it's a really fascinating way of how urban planners have thought about what it takes to move an entire town in sweden totally
dependent on this mine. jonathan: they are definitely good sports. >> the town, the northernmost city in sweden, the gateway to the swedish wild north. this is mostly unpopulated country. account of 18,000 that exists because of the world's largest underground iron ore mine. that mine is causing the town to sink. if the town wants to live, they have to move. there is no town without the mine. jonathan: the town is there because the iron ore has brought in this small economy for this town, and now because the miners are pushing further to get to the resource, it is changing the topography of the land and now they are having to move. josh: exactly it opened in 1890. it was a camp that grew into a town. mostly it is a mining town. that people have a high standard
to live in because of the mine. if they want to stay, they have to move. as it goes deeper, than the need for ore increases, that undercuts another section of the town. they have to move the entire center of the town, including 5000 people in most businesses. jonathan: let's start with who actually is mining. is a government sponsored or private? i assume they are probably involved in the government, federal level. josh: it is a state owned money company called lkeb. the company operates on its own. it is quite a profitable entity. they are responsible by swedish law for taking care -- if a community is affected in an
adverse way, if they want to continue mining they have to address the problem. they call it the deformation zone. that zone keeps growing. every time he grows, anyone who has to move for businesses, they have to pay for the relocation. they are just embarking on a huge and complicated move that'll require -- no one really knows. 10 to 15 years. by 2035 they have to be done or the part of town will sink. jonathan: one of the effects of the actual mining process? if you know this thing is there, let's build around it. was therefore here than we thought or we need today deeper than we thought? what was the change that came about? josh: it is the world's largest body of iron ore, that we know of. is shaped like a piece of toast on an angle starting under a
mountain and running below the town. it began as an open pit mine. they exhausted that, deeper underground. i don't think anyone anticipated it would be mining this long. at some point it will become unprofitable and they will stop, but they have not reached that stage yet. everyone knew that some people would have to move. already people have moved the is the original cancer gone. the lake has been dammed. no one realized how long do we continue mining. now that they are profitable at a deep depth already, well, maybe we can go further. we will have to move everybody. we will just deal with the problem we have created. people want this ore and they will mine it. jonathan: and the era of mind control computers may be closer than you realize. this is "bloomberg businessweek." ♪
it's actually now possible when people are connected via their brains to a computer. people are moving cursors around on a screen. even able to sense objects in the outside world through wires connected to their brain. that is more possible than maybe many of us would have imagined. the really hard stuff like doing a robocop, or you just plug a brain into a matrix and they can sense and act upon the world fluidly, that is still a long way off. jonathan: we are talking about specific technology you profile, braingate. tell us what this project does. >> this is really a wide reaching consortium of researchers at a number of
different universities who are working together to probe the question of how can we connect the human brain to the outside world? both to sense the outside world and act upon the outside world. and also to reconnect connections that have been may be severed. if someone is quadriplegic. i talk about a fellow who had fallen, broken his neck and was paralyzed and it was assumed that was it. that is with dr. said set for generations. we cannot cure this kind of paralysis. but now thanks to some research that is been done at stanford, he is able to -- he imagines moving his hand. he can't actually move his hand, but the part of his motor cortex that would do that is generating signals that can be picked up and transmitted and interpreted by a computer. so out a cursor can move on the
screen and he can potentially type out words. jonathan: it is very complex science. give us the overview. this is basically a chip that is implanted into the human brain, it is connected. pretty weird stuff going on. >> in principle it's very simple. you are just plugging something in. the brain is essentially a very complicated electrical circuit. to actually get it to work, it turns out to be really hard. jonathan: it is great technology and interesting to me personally. i brother worked as a student and was actually at the time around 2008. they were basically still in the early stages of this. what has been the drive for the progress made? in the a demand from a market perspective, funding from the federal level?
what is able to bring this technology forward so quickly? >> it is technology that is very easy to grasp. anybody on the street can understand connecting brains to computers, that is telepathy. artificial communication and robocop and all the things that are easy to understand. at the same time it is very basic research. the work being done with live human subjects and animal subjects, this is not something you can walk into the drugstore anytime soon and say give me one of those brain interfaces. but the day probably will come where the technology -- the way that all types of information technology is progressing these days, who knows how quickly these things will come? jonathan: we are going to need a lot more lithium and fast. we talk about the need for battery production. >> we were interested in what goes on inside and electric car. a lithium battery is a key component. interestingly, the lithium-ion
battery is only made up of 15% lithium. there have been a lot of questions about whether there is enough lithium on the planet for the boom in electric cars. by 2040, one third of the vehicles on the road will come with a plug. is there going to be enough lithium in the world? two years ago there was a huge spike in the price of lithium because traders were worried there was not enough. actually analysts found even if we meet the ambitious forecasts for those vehicles, they will meet less than 1% of the lithium reserve around the world. jonathan: that that's the question right off the bat, how do you go from thinking there is a shorting to thinking you'll have only mined 1/100th of it? jess: you will think it is made up mostly of lithium.
it's really a small amount, something like 15% or less. elon musk called it the salt and the salad. it is crucial to making a battery work, but you don't need that much of it. you need nickel, cobalt, manganese. these will not run out either. jonathan: we talk about lithium and some of the viewers might have seen some bloomberg programming which we have gone to some of these lithium plants in latin america and south america. there is big feels of this, but were also going to be mining this? how difficult is it to get to the 1%? jess: it is mind all over the world. you can find it here in southern england, or on the atacama plains. lithium is abundant.
there is still a question about whether we are able to get it out of the ground. but we need to do, and this is where the bottleneck could come, the forecasters think we are going to need about 35 factories producing batteries the same size as elon musk's factory in nevada by 2030. they are buying up the land, but we need to get it out of the ground. when you get that made into batteries. that is where some of the bottleneck could come. jonathan: by more people are going to medical but choosing not to practice medicine. up next, why diamonds are not a banks best friend. this is "bloomberg businessweek." ♪
♪ jonathan: welcome back to "bloomberg businessweek." you can catch us on the radio at sirius xm 119, a.m. 1330 in boston, 99.1 fm and washington, d.c. and in london on nux 3, and in asia on the bloomberg radio plus app. >> the physicians foundation doing annual survey hints out about 13.5% of medical school graduates are considering nonclinical work. they are seeking it. they are going into feels like law and business. i find as a biotech reporter more and more ceo's i interview had just gotten out of medical school and starting companies,
drug companies, medical device companies, consulting, running hedge funds and things like that. jonathan: i feel like there are some potential extra for this. i am thinking about the complexity of insurance, especially when health insurance is constantly in the battle with the political side. there seems to be a booming biotech. private equity. is it coming from a demand side, supply-side? what is behind the trend? >> there are some the things behind this trend. a number of doctors are frustrated by the amount of paperwork they are seeing other doctors having to do. they look ahead at a career that is not paying as well as it used to. they are having to deal with third-party payers and health insurance uncertainty right now. a lot of them are deciding to use other skills they have. go into business or go into law
or other fields. the business folks are the ones i focused on. they felt they could cure more illness by going into medical device or biotech field and developing drugs that would the able to treat a number of patients rather than just the one patient at a time each day and feeling the stress of being a day-to-day doctor. jonathan: the world's dominant diamond financer is a cautionary tale for any bank. tom: the diamond mining site is dominated by two companies. they sell the rough diamonds and what is called the midstream. this is dominated by family-run companies, mainly from indian and jewish backgrounds. they are based mostly in antwerp, india, tel aviv and new york. these guys cut, polish and trade those rough diamonds before selling them to retailers like signet and tiffany. they are often quite large businesses, but family-run. incredibly capital-intensive. and because they are family-run, you don't have the transparency that you see in many other sectors.
they have lots of interdependent bodies. volume is what you send going. every step of the way they are utterly dependent on bank financing. jonathan: the capital intensive middlemen that need these loans at the onset to get their operations running, those loans probably have a little more -- a little less clarity to them in terms of who you are dealing with. is that what came home to roost for the bank? tom: the difficulty is what you lending against. if you loan money to a cement company or steal plant and he
goes belly up, there is a clear asset you can then go and reclaim things go wrong. with the diamond industry that is not the case. the world is the diamond themselves or the iou's that i not been paid for yet. trying to claim those back is very difficult. diamonds that maybe there is no other commodities were so much money can be transferred in your pocket so quickly. it is automatically a risk for them. the diamonds are constantly being moved. they are in antwerp and in dubai in and moved to mumbai and then new york and tel aviv. it is incredibly hard to follow the circular path they take. jonathan: how big is standard chartered into diamond-related lending? tom: maybe $5 billion at its peak level. for a bank of their size it was never going to break the bank,
but it was a significant amount of money. jonathan: some of the default start to happen. how much default was there? have been to the problem get for the bank? wanted they doing now? tom: they have provisioned about $400 million for losses and loans they don't expect to reclaim. they still have $1.7 billion into this industry. they said they want to either sell or reclaim the money. it is difficult to do. a lot of businesses are very stretched. have not made much money for the last five or six years. a lot of companies are not in a position to repay these loans unless replacement financing comes in. there is not a huge amount of people lining up wanting to come and replace the loans. they have this question of how much, how and when public if this $1.7 billion back. jonathan: bloomberg businessweek is on newsstands and online. bloomberg television starts right now. ♪
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